San Diego Ace dealer with a definite niche

Home Channel News, August 9, 1999 by Brae Canlen

Hillcrest Ace targets affluent gay clientele by creating a home center/home decor hybrid

In the front window at Ace Hillcrest Hardware, three purple Teletubbies dolls dangle over a field of daisy lawn ornaments. A red-and-white sign says, emphatically, "You're not in Kansas anymore." The window display is an inside joke that delights many of the store's customers. It also broadcasts a message to the world at large: This is not your typical Ace dealer.

Ace Hillcrest Hardware is located in a San Diego neighborhood with a high concentration of gays and lesbians. The owners are also gay, along with most of the staff. The 8,000-squarefoot retailer just celebrated its fourth anniversary, and annual sales have passed the $1.6 million mark. Teletubbies aside, Ace Hillcrest Hardware serves as a model for other retailers aiming for an upscale market.

"Our original concept was to merge Crate and Barrel with Home Depot," says owner Bruce Reeves. He and business partner Joe Jeter saw an opportunity in Hillcrest, a centrally located urban area that had no local hardware store. They chose a commercial block with limited parking but lots of foot traffic.

Jeter, a contractor-turned-investor, became the equity partner while Reeves started schooling himself in the retail business. "I visited more than 40 Ace dealers around the country, but I didn't find anyone who was already doing what we wanted to accomplish," says Reeves. The 35-year-old former landscape architect also spent three months working at the Great Ace hardware store in Chicago. In early 1995, he and Jeter began remodeling a 1930s-era building with a loft and a basement. But first, they had a heart-to heart talk with Ace Corporate.

"We went to them and said, 'Look, we're openly gay. We're going to cater to the gay community, and we plan to have a float in the Gay Pride parade every year. Do you have a problem with that?' " recalls Reeves. The answer was no -- as long as they ran a successful operation.

Reeves and Jeter did just that. During the store's first 12-month period, sales surpasses $1.2 million. In 1996, Ace chose Hillcrest as its "Southern California Store of the Year." Reeves was also named a "Young Retailer of the Year" in 1997 by the National Retail Hardware Association.

When you first walk into Ace Hillcrest Hardware, it's hard to believe that the store carries a serious collection of electrical, plumbing and hardware supplies. Tall green plants, natural lighting, and 25-foot ceilings give the entrance an open, airy atmosphere. "We wanted a strong, almost overpowering sense of place," says Reeves, who hired an interior designer to get an upscale look with the feeling of an old-fashioned hardware shop.

Housewares are grouped in the front of the store on nine-foot tall Lundia wooden shelves. Rolling ladders provide access to the upper reaches. "Housewares continue to be our No. 1 seller," says Reeves, who offers an assortment of textiles, tabletop and giftware. Small appliances like coffee-makers and blenders move well.

More than half of the store's customers are renters, so Ace Hillcrest stocks low-end drapery, closet organizers, and wide assortment of fashionable plastic ware. The paint department is running a close second to housewares, despite competition from a Vista Paint & Wallcovering unit five blocks away.

Another competitor is San Diego Hardware, but this independent specializes in restoration hardware and caters to a larger contractor base. Reeves considers Home Depot as his main rival. "The nearest Home depot is 3.5 miles away, but it's a long, hard 3.5 miles," Reeves observes, referring to the traffic congestion in the Sports Arena area. "Some people are willing to make that drive to save 20 cents," he says, shrugging.

But some shoppers at Ace Hillcrest Hardware would rather chew nails than take their business to Home Depot. "We have very loyal customers," says Reeves. "The gay community has gotten us through the lean times." Ace Hillcrest Hardware has reciprocated with donations to AIDS charities and other local causes. The store also advertises with circulars in both the gay and mainstream press.

Market research on gay and lesbian consumers is scarce, controversial and has been accused of being inflated and inconclusive. But that hasn't stopped credit card companies, airlines, and shoe manufacturers from targeting this population segment through national ad campaigns.

Mulryan/Nash, a New York ad agency that focuses on this niche market, puts the average income of gay individuals at $47,090 a year. A 1996 Mulryan/Nash survey, conducted in conjunction with Simmons Market Research, found that 11 percent of the respondents planned to remodel a bathroom or kitchen the following year.

Some dealers in the home improvement industry are starting to catch on. Pro-Line Construction of N.Y. Inc. has been advertising in the Western New York Gay community Yellow Pages for the past two years. "We're very happy with the results," says Kevin Prenatt, manager of the Canandaigua, N.Y., branch. "We've done our research, and we found higher-than-average incomes and education levels among our [gay] customers. They also make a lot of referrals, and that's where most of our business comes from."